BAPCPA Looks More Like BARF to Those in the Thick of It

Something's very wrong when an estimated 500,000 Americans felt compelled in the last week to file for bankruptcy in order to avoid the chance that if they do have to file in the future, they'll regret not having done so now. As most know, these filings were precipitated by BAPCPA (the "Bankruptcy Reform and Consumer ProtectionAct of 2005"), which goes effective at midnight on October 17, 2005.

What a misnomer that Act is proving to be! Doubt any consumers who recently filed for bankruptcy relief would say the new law made them feel protected. Some have suggested that the new legislation should have been called BARF (Bankruptcy Abuse Reform Fiasco), not BAPCPA.

The unprecedented crush of pro se consumer filings in Chicago (where electronic filings are mandatory) was so great on Friday that it overwhelmed the servers, shutting them down until around midnight the next day. Stories from NY, Denver, DC, Fresno, and Montana show that no section of the country was spared from the onslaught of bankruptcy filings. Many creditors will feel pain too as hundreds of thousands of debtors walk from debts they may have paid absent the new law.

In the end, the new legislation has spawned a pathetic mess for poor and middle America, as well as for bankruptcy's machinery, though I suppose some will benefit. I suspect that bankruptcy judges will show up a bit tired and ornery at this year's NCBJ, rightly feeling overworked, underpaid, and ignored on policy and drafting issues. Ask, for example, Judge Robert Mark, Chief Bankruptcy Judge of the Bankruptcy Court for the Southern District of Florida, who opined last week in only the second reported BAPCPA opinon (where he categorically disagreed with the first reported BAPCPA opinion that reached an intuitively wrong result based on the "plain meaning" of one of BAPCPA's raison d'etres, the provision purporting to eliminate the "Mansion Loophole" whereby the wealthy in states like Florida and Texas shirked their debts while keeping their mansions):

After reading the several hundred pages of text in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the "Reform Act"), one conclusion is inescapable. The new law is not a model of clarity. Implementing the changes will present a daunting challenge to judges, clerk's offices, attorneys and the parties who seek relief in the bankruptcy court after October 17, 2005, the date most of the provisions become effective.